Medicare and health care: Where have they been in the budget debate?
While jogging this morning, I heard an interesting discussion/debate on the 鈥溾�� radio show between Dean Baker and Steve Bell (also, listen to the opening where Major Garrett shares some worthy insights into the debt deal鈥攈is first is dead on: 鈥淎 new precedent. Debt-ceiling increases are now tied to deficit reduction.鈥�)
One part that interested me was their discussion of health care and its role鈥攐r lack thereof鈥攊n the budget debate. As long as health care costs keep growing two percent faster than GDP, which has been the trend for years now, there鈥檚 no clever debt deal that 鈥済ets our fiscal house in order.鈥�
So, if we wanted to have a discussion about actually changing out budget trajectory, we鈥檇 have to talk health care (we鈥檇 also have to talk revenues, but that鈥檚 another discussion). And here, an important concept here is cost-shifting versus cost-saving.
Given all the talk of the budget pressure from health care entitlements鈥�Medicare and Medicaid鈥攊t鈥檚 easy to forget that our affordability problem is as much a private sector as it is a public sector problem. If anything, costs in the public programs have consistently grown more than those in the private sector (which makes sense when you think about overhead, like advertising and profits).
I stress this because Bell raised the issue of premium support鈥攚here the gov鈥檛 subsidizes your purchase of a health insurance policy鈥攁s a tool for health care reform, citing a plan that gave seniors the option to opt out of Medicare and use vouchers to purchase health insurance on the private market. You will recall that Rep Ryan鈥檚 premium-support plan took a lot of heat, but Bell argued his plan is better since it offers a more valuable voucher whose value grows more quickly.
He鈥檚 right about the improvement over Ryan, I鈥檓 sure, but these voucher programs generally just shift costs around. That is, they get around that GDP+2% problem by force, and only for the public sector. In Rep Ryan鈥檚 case, the voucher grows with inflation; in Bell鈥檚, it鈥檚 GDP+1%.
Both will lower costs to the government but neither will lower costs to the system, and that makes all the difference. If you don鈥檛 do something to slow the pace of health care costs system wide, you鈥檙e pretty much shifting around deck chairs.
My CBPP colleague Paul Van De Water will have a piece out soon on premium support鈥攍ooks excellent from what I鈥檝e seen so far, and I鈥檒l link to it when it鈥檚 out.
